Your Financial Future: Set reasonable financial goals for 2023

Many people will be glad to see 2022 come to an end. Inflation has exploded to a 40-year high. In response, the Federal Reserve Board has increased interest rates multiple times. The stock market has dropped significantly in value. We recently witnessed one of the biggest financial crimes in the cyber currencies market. There is political uncertainty around the world. While individuals have no control over any of these things, we need to take steps that we can control to help our families.

At the beginning of a new year, many people make resolutions about changes they hope to make to improve areas of their lives. Most of these grand ideas are abandoned before the end of January. Good intentions without follow-through have no value.

New Year's resolutions are usually not successful because they are too big and staying motivated for 12 months is a long time. There may be a way you can make changes to your financial life if that is your goal.

First, you have to decide what is your why? This means why do you want to make these financial changes? Will it make retirement more enjoyable? Life less stressful? Whatever it is, if you can mentally picture in your brain the benefits of accomplishing this change, you are more likely to stick to them. This helps you see the value for any sacrifices you must make.

Next, pick one area to concentrate on, not making many changes at once. Once you have determined your starting point commit to a 30-day challenge to that goal. You can often accomplish this in 15 minutes per day. For instance, if your goal is to save more emergency money, what could you do? Keep a journal of all the money you spend each day. Many people do not understand where all of their money goes each month. Carrying a small notebook makes it easy to record your expenditures.

After a couple of weeks, decide where money is being spent that is not necessary. These funds can be redirected to a savings account. If you save $20 dollar per week, you will have $1,000 saved at the end of a year. Emergency money has to be kept in something such as bank accounts where it is available at a moment's notice when needed. It will not earn much interest, but that is OK for some of your money.

While having an emergency account at the bank is important, having too much money sitting in the bank, with our low interest rates, could be a poor financial decision. Five-year CDs are paying less interest than some other same investments that are very safe. These CDs are getting killed by inflation. Liquidity is important, but having too much can be expensive.

Improving your finances will take a little work. Albert Einstein once said, "Only a fool would think you can keep doing the same thing and get different results." You can do this.

Next week we will discuss some other little thing you can do to improve your financial life.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, "Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility." If there is an area that you would like to see discussed in the column, send your suggestions to [email protected].